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Regeneron (REGN) Up 0.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Regeneron (REGN - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Regeneron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Regeneron Earnings & Sales Beat on Strong Dupixent, Eylea

Regeneron delivered impressive results in the fourth quarter of 2018, wherein both earnings and sales beat estimates.

Regeneron reported earnings of $6.84 per share in the fourth quarter, comfortably beating the Zacks Consensus Estimate of $5.69. The bottom line also improved from $5.23 in the year-ago quarter.

Total revenues in the reported quarter increased 22% year over year to $1.93 billion, driven by strong sales of Dupixent and the flagship drug, Eylea. The top line also surpassed the Zacks Consensus Estimate of $1.71 billion.

Regeneron co-developed Eylea with the HealthCare unit of Bayer AG. The company is solely responsible for the sales of this eye drug and is entitled to profits in the United States. However, it shares profits and losses equally with Bayer from ex-U.S. Eylea sales, except in Japan where the company receives a royalty on net sales.

Quarterly Highlights

Net product sales increased to $1.096 billion in the quarter under review, up 12% year over year. Majority of the sales came in from Eylea in the United States ($1.079 billion, up 10.7%).

Total revenues also included Sanofi and Bayer’s collaboration revenues of $729 million compared with $497 million recorded in the year-earlier quarter.

The increase in Sanofi collaboration revenues was primarily owing to the company’s share of higher net sales derived from Dupixent and Praluent. Bayer collaboration revenues grew on the back of a rise in share of net profits related to higher sales of Eylea outside the United States.

Praluent recorded global net sales of $93.2 million in the reported quarter, up from $63.3 million in the prior-year quarter. Praluent has been developed in collaboration with Sanofi. Sale proceeds from products like Praluent, Dupixent and Kevzara are recorded by Sanofi while Regeneron earns profits or incurs losses from the commercialization of the drug.

Dupixent’s sales came in at $318.8 million, up from $138.9 million in the year-ago period. The drug was approved in 2017 for treating adults with moderate-to-severe atopic dermatitis. Kevzara recorded sales of $35.2 million, up from $9.5 million in the year-ago quarter.

The FDA approved Libtayo in September 2018 for the treatment of patients with metastatic or locally advanced CSCC, who are not candidates for curative surgery or curative radiation. Libtayo sales in the fourth quarter totaled $14.8 million.

R&D expenses increased 13.8% while selling, general and administrative (SG&A) expenses escalated 19.7% during the quarter under consideration.

2018 Results

Revenues summed $6.7 billion, up from $5.9 billion in 2017 and also beat the Zacks Consensus Estimate of $6.5 billion. Earnings per share came in at $22.84, easily outpacing the Zacks Consensus Estimate of $21.56. The bottom-line figure was also up from $16.32 in 2017.

2019 Outlook

Collaboration revenues from Sanofi are projected around $510-$560 million. The company expects adjusted unreimbursed R&D expenses of $1.59-$1.71 billion. Adjusted unreimbursed SG&A expenses are anticipated around $1.50-$1.60 billion.

Pipeline Update

The pipeline progress was encouraging.

The phase III PANORAMA trial, evaluating Eylea on patients with moderately severe and severe non-proliferative diabetic retinopathy, met its one-year primary endpoint and key secondary endpoints including an improved diabetic retinopathy and a reduction in the rate of vision-threatening complications. The FDA accepted the supplemental Biologics License Application (sBLA) for review of Eylea regarding treatment of diabetic retinopathy with a target action date of May 13, 2019.

Regeneron is also working to expand Dupixent’s label. The FDA approved Dupixent as an add-on maintenance therapy in October 2018 for patients with moderate-to-severe asthma, aged 12 years or above with an eosinophilic phenotype or oral corticosteroid-dependent asthma. Regeneron and Sanofi submitted an sBLA and a Marketing Authorization Application (MAA) for the label expansion of the drug to indicate atopic dermatitis in adolescent patients (aged 12-17 years).

The FDA has accepted the sBLA for priority review of the drug pertaining to atopic dermatitis in adolescent patients and set a target action date of Mar 11, 2019. Last December, Regeneron and Sanofi submitted an sBLA for Dupixent to treat chronic rhinosinusitis with nasal polyposis.

Moreover, the FDA approved Praluent for the treatment of patients with heterozygous familial hypercholesterolemia (HeFH) undergoing apheresis. The regulatory agency also accepted an sBLA for Praluent as a potential treatment to reduce major adverse cardiovascular events and set a target action date of Apr 28, 2019. The FDA also accepted an sBLA for review of Praluent with respect to first-line treatment of hyperlipidemia with a target action date of Apr 29, 2019.

Earlier in 2018, Regeneron also entered into a collaboration agreement with bluebird bio, Inc. to research, develop and commercialize novel immune cell therapies for cancer.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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